Subject: Re: Numbers
I’m not going to respond to condescending insults—so let’s just see if I can explain in a way that even YOU can understand:

You’re correct that float is a liability in accounting terms. No one disputes that.

The issue is economic value.

If float costs 0% (or less), and can be invested at a positive rate, the value of float is the present value of the spread between investment return and float cost.

That is not rhetoric — it’s finance.

\text{Value of Float} = \frac{(r - c)F}{\text{discount rate}}

If:
• r > c
• float is durable
• underwriting discipline is maintained

Then float has positive economic value above book.

This is not my invention.

CHARLIE MUNGER said float is worth “more than 1.0×” and rationally “1.1× or more” if it is low-cost and durable. You might want to revisit your moniker if you seek to attack Charlie and my thinking on literally THE most fundamental matter in understanding what makes Berkshire uniquely valuable.

Warren Buffett has repeatedly stated that costless float is BETTER THAN EQUITY..

That is because equity carries a required return. Float does not.

If you assume:
• T-bill returns forever,
• 10% discount rates,
• and low reinvestment spreads,

you will, of course, get a low valuation.

But Berkshire does not invest float at T-bill rates over full cycles.

Historically, float has funded operating businesses and equities compounding at far higher long-term rates.

Your model implicitly assumes:
• Low returns
• High discount rate
• Limited reinvestment opportunity

That is a different business than Berkshire has been for 50+ years.

We can disagree on assumptions.

But the principle that low-cost, durable float has positive economic value above book is not controversial. It is the core of Berkshire’s model.

You can continue to argue float has minuscule value relative to equity as you outlined ..but..

Warren Buffett explicitly disagrees you.

Charlie Munger explicitly disagrees with you.

Attacking ME won’t make you right, and Warren, Charlie, and me wrong.